Tokyo 2020 Olympics

The Real Effect Of Major Sporting Events On Host Cities

The more modest approach for 2020 is good news, because the Games won’t bring in much money. For a start, the predicted visitors rarely materialize at these events. Before the World Cup of 2002, Japanese and Korean government officials were predicting that the tournament could boost their economies by a staggering $26 billion and $9 billion, respectively. After the event, there was little sign of any such boost, and indeed some evidence that the tourists who usually visit Japan in summer had stayed away for fear of fuss, crush, high prices and soccer hooligans.

That’s what usually happens: big sports tournaments attract some visitors, and deter many others. Greek tourism officials estimated in late 2004 that there’d been a 10% fall in tourist arrivals during that year’s Athens Olympics, as vacationers choosing summer destinations steered clear of the frenzy. In London last year, many visitors came for the Games; many more stayed away fearing fuss and crush, according to estimates from the tourist body UKinbound. The Bank of England’s chief economist Spencer Dale, when asked about the Olympics’ long-term economic benefits, said, “I don’t think it will have a material impact in our predictions.” I suspect Tokyo will have much the same experience.

True, some of the infrastructure Japan buys for Tokyo 2020 will have its uses afterward. But much of it won’t, because the things you need for an Olympics — big venues for esoteric sports, roads to the venues, TV facilities — are never quite the things you need after the tournament.

In short, hosting a big sports event isn’t an economic bonanza. Rather, it’s a series of transfers of money and pleasure from some groups of people to other groups. That’s the best way to understand next year’s Brazilian World Cup: a series of transfers of money and pleasure, from the Brazilian state and taxpayers to FIFA and the world’s soccer fans, and from Brazilian taxpayers to Brazilian soccer clubs (who will get shiny new stadiums) and construction companies (who will be paid to build them).

Happily, the world has recently begun to grasp that hosting isn’t an economic boon. In recent months we’ve seen vast demonstrations in Brazil, inspired partly by anger that this country with millions of impoverished people was spending billions on the World Cup and the 2016 Rio Olympics. The protesters waved some rather compelling banners: “A Teacher is Worth More than Neymar,” and “We Have World-Class Stadiums — Now We Just Need A Country to Go Around Them.” Indeed, the growing global realization that hosts have been forced into irresponsible spending was one reason why the International Olympic Committee gave the 2020 Games to Tokyo. It’s not merely that Tokyo has much of the required infrastructure already in place but that Japan was planning massive infrastructure spending anyway. Of all the cities that bid for the 2020 Games, Tokyo is probably the one in which the Olympics will do least economic damage.

Best of all, it’s a mega-city, a giant economy that can more easily absorb the costs than poorer Istanbul or smaller and poorer Madrid. All the Olympics since 2008 have gone to metropolitan areas with populations of at least eight million: Beijing, London, Rio and Tokyo. Nobody wants a repeat of Athens, which spent billions it didn’t have on venues it didn’t need: When the Wall Street Journal investigated in 2010, it found that 21 of the 22 Olympic venues in the Greek capital were unused.